Car insurance begins with your policy. You don’t need to be afraid of it, but you should take it seriously. Simply put, the car insurance policy is the agreement between you and your insurance company; a contract that determines the coverage you’ll receive when certain events occur and the corresponding premium that is required from you.

The responsible thing to do is to learn about the various types of coverage offered so that you can make the correct decision when choosing an auto insurance policy. Note that individual states have requirements for minimum insurance coverage so you can tailor your policy to fit both your needs and what is mandated by state law.

Liability

47 states in the country have liability coverage as their state minimum for a citizen’s car insurance policy. Expenses that happen due to accidents such as medical expenses, lost wages, and the costs of damaged property along with defense and court cases are a major part but do not encompass liability coverage completely.

PIP or Personal Injury Protection

Also required in some states, personal injury protection (PIP) pays for medical expenses and lost wages, without prejudice of who is at fault, incurred due to an automotive accident. By including PIP on your policy, you will meet the minimum requirements for many states.

MedPay Coverage

Just like personal injury protection, medical payments coverage handles the medical expenses of the owner of the insured car along with anyone else riding in the car when the accident occurred. But as its name suggests, it only covers medical expenses and can very well be coverage that you already have.

Collision

If you get into an accident involving a collision with another vehicle or object, having this coverage as part of your auto insurance policy will take care of the damages to your own car. Simply having collision coverage is sufficient for some drivers, but it’s always better to get more coverage than what you think you need.

Comprehensive Auto Insurance

Comprehensive Car insurance handles everything outside of an auto accident involving a collision. This coverage provides for the expenses incurred by the loss or damages cause by flood, hail, fire, vandalism or theft.

Underinsured/Uninsured Motorist

Because of how car insurance policies can be tailored by individual car owners, there are instances when the coverage differs between two parties involved in an accident or when one person is uninsured or underinsured. This coverage makes up for that difference so that damages are covered regardless of whether there is an uninsured motorist involved.

Consider your own risk factors, your state laws and the level of coverage (and their corresponding costs) you feel is sufficient before signing that car insurance policy into effect. So what do think? What combination of all that was explained here will suite you? Chime in the comments section with your answers.

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